Turning around on Wall Street

The financial industry didn't collapse in the economic earthquake, but for many its image has been shaken.

September 06, 2009|David S. Abraham | David S. Abraham, formerly a sovereign analyst at Lehman Bros., works at an investment research firm.

In the last decade, technology has reshaped industries and redefined the very nature of work for many Americans. Yet even as the world has shifted, some jobs remain unaffected. In honor of Labor Day, we asked writers from four different fields to discuss how their fields have -- or have not -- changed.

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Life was good. I was turning 35, had just moved into a new apartment and was settling into my job on Wall Street. Then came September 2008 and the largest economic earthquake since the Depression. As an employee at Lehman Bros., I was at the epicenter.

I had left my previous job in government, enticed by the grandeur and financial rewards of working on Wall Street, the nerve center of global finance.

I was surprised initially to find how narrowly defined people's roles were. Some traded only Latin American debt; others analyzed the credit risk of hedge funds. Some people had jobs with incomprehensible titles, like "high frequency stat arb quant trader."

On Wall Street, people were paid well to focus narrowly. And that, in retrospect, might be the simplest explanation for our financial crisis: No one was focused on the total picture. Even as we built complex financial derivatives, our very foundations -- based on rising debt and low-quality assets -- were rotting.

As Lehman's stock price fell from $64 to $40 to $24, we knew we were in trouble. But most of us believed the markets had just temporarily turned against us. It was easier to focus on market misinterpretation than on the possibility that a business model developed over the course of 150 years had suddenly failed.

The day we declared bankruptcy, almost everyone came to work. Many took personal information off computers and updated resumes for the headhunters that were suddenly calling. The smart ones went to bars. They figured -- rightly as it turned out -- that there would be plenty of time for job-hunting. In the span of a week, Wall Street lost its swagger. The people who turned confidence and money into more of both were suddenly left wondering how they would make a living at all. Up and down the Street, no one was lending; few were trading. There was little to do but wait to see which firm would fail next.

After I lost my job in November, I took little comfort in knowing I wasn't alone. That meant a lot of competition. We were all seeking the same shrinking pool of finance positions. The word on the Street was that our field would never be the same.

By late spring, however, limited hiring had returned. And today almost all of my colleagues who lost jobs seem to have them -- at least temporary ones -- according to their LinkedIn status. Some are doing the same jobs for different companies. Others started new firms or headed to small hedge funds to avoid government-mandated pay restrictions. One resourceful friend, who underwrote commercial real estate loans, now cleans up the books of banks that made too many. Despite an initial jump in job loss and some lingering unemployment, predictions that one in four finance professionals would be out of work never materialized.

Earnings are up, and so is the confidence to explore controversial new ways to make money, like high-frequency computerized trading. The community is a bit smaller, the deals not yet as grandiose, the pay slightly more modest. The biggest change may be one of image: Wall Street has lost its luster.